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Saturday, 4 May 2013

Financial Analysis of Asian Paints-Finance Project Report Topic

Asian Paints is India's largest and Asia's third largest paint company today, with a turnover of
Rs 44.04 billion (around USD 1.1 billion). The company has an enviable reputation in the
corporate world for professionalism, fast track growth and building shareholder equity. Asian
Paints operates in 20 countries and has 28 paint manufacturing facilities in the world servicing
consumers in over 65 countries. Besides Asian Paints, the group operates around the world
through its subsidiaries, Berger International Limited, Apco Coatings, SCIB Paints and
Taubmans.

Business Segments

Company business is divided mainly into two segments. They are:

1) Paints Segment
2) Chemicals Segment

1) Paints Segment
This is the primary business of the company. Out of the total revenue earned by the
group 97% is generated from this segment. This segment is divided into two.

• Decorative Paints: Decorative Paints business contributes around 94% in the total
paint business. The company ranks no. 1, in the country in this segment with
around 8500 colors to offer to its customers. It has 5 manufacturing plants
operating all over the country, which is strategically located in-order to cater to the
widely spread, market.

In Decorative paint segment, the Company operates in 4 main segments i.e. interior
wall finish, Exterior wall finish, Enamels and Wood Finishes. Besides, the company
outsources around 25-30% of its total production.

• Industrial Paint Segment: - In this business, the company caters to automotive,
powder, protective coatings, road markings segment, floor coatings and General
Industrial Paints. Most of the industrial paints business is operated by two
companies’ viz. Asian PPG Ltd. and Asian Paints Industrial Coating Ltd. The company
ranks first in the automotive paints business in domestic market. The company
ranks second in protective segment and first in the road-marking segment. Recently
it has entered in floor coating segment.

2) Chemicals Segment
Chemical business includes manufacturing of Phthalic Anhydride (PAN) and
Penraerythritol (PENTA). APL has its PAN manufacturing plant at Gujarat (capacity –
25,200 MT) and PENTA manufacturing facility at Tamil Nadu (capacity – 3000 MT). The
company consumes nearly 50% of its production as captive consumption and sells the
remaining in the open market. This business contributes around 3% to company’s
consolidated revenues.

Key Concerns

• Volatile raw material prices and currency fluctuations.
• Demand deterioration to impede growth.
• Disruptions in the global financial markets continue to pose threat to the world
economy and its possible ripple effect on India cannot be neglected.
• The foreign exchange market continues to be volatile.
• Rising commodity prices including crude oil prices and the resulting high inflation could
lead to further tightening of monetary conditions.
• Adverse impact of global financial turmoil, political, economic and natural conditions in
geographies where Company has significant presence, can affect the business
performance.
• Socio-Cultural Risk in International Market.
• Increase in Raw Material Prices.

Charts showing the Financial Analysis of Asian Paints

Industry Overview

Paint is defined as the group of emulsions, consisting of pigments suspended in a liquid
medium, for use as decorative or protective coatings. “Paint” ranges from the broad group of
environmentally-sound latex paints used to decorate and protect homes and the translucent
coatings that line the interior of food containers, to the chemically-complex, multi-component